Beer boosts Lion Nathan as wine drops

LION Nathan has reaffirmed its 2009 full-year profit guidance, but like Foster's, has flagged trouble for its fine wine business.

The beer and wine company said it remained on track to deliver a $300-$315 million post-tax profit after unveiling strong first quarter results yesterday.

Total beer volume grew 9 per cent to 221 million litres for the quarter ending on December 31.

Chief executive Rob Murray said the business was in "robust" shape.

"The beer market is resilient and our largest business units continue to deliver high quality costs," Mr Murray said.

While beer sales boomed, growing 15 per cent, the fine wines operation experienced a 10 per cent revenue slump.

"The fine wine market has declined dramatically as a result of the current economic conditions, particularly in the UK and US but also Australia," the company told the market yesterday.

"The extreme heat and fires in Victoria and South Australia over the summer period are likely to adversely impact the current vintage and this will have a negative impact on the SGARA (self-generating and regenerating assets) valuations in the current financial year."

Deteriorating global viticulture trading conditions would mean its full-year wine results were likely to be "down significantly", but would not be material to the full-year result, the company said.

The wine decline came two days after Foster's - its major competitor - revealed an extensive reorganisation of its business and plans to shed more than half of its wine operations because of poor sales and marketing.

But an analyst said the two companies' wine problems were starkly different.

"Foster's problems came from years of mismanagement. It was not as a result of the economic conditions," the analyst said.

Lion Nathan also said the failed $7.3 billion takeover bid for Coca-Cola Amatil had cost about $3 million, mostly in debt facility fees.

Lion Nathan shares closed 13 higher at $8.92.